Philip Maddocks: Financial system arrested and sentenced to 13 years in prison

Friday

Oct 21, 2011 at 12:01 AMOct 21, 2011 at 9:14 PM

After eluding authorities and regulatory agencies for decades, the country’s fugitive financial system was finally apprehended this week and sentenced to 13 years in prison.

Philip Maddocks

After eluding authorities and regulatory agencies for decades, the country’s fugitive financial system was finally apprehended this week and sentenced to 13 years in prison.

“Hopefully this will bring closure — and not another foreclosure — to the millions of Americans and their families who have been terrorized by this ruthless sociopath, especially in the last few years,” said Treasury Secretary Timothy Geithner after the capture this week.

Mr. Geithner said an anonymous tip from a disgruntled former executive at Lehman Brothers led authorities to a building basement in Lower Manhattan. Mr. Geithner and elite investigators from Treasury Team 008 stormed the building on Monday just before the ringing of the opening bell at the New York Stock Exchange and found the financial system hard at work creating what appeared to be trillions of dollars worth of Manhattan Dollars.

Law enforcement officials said the arrest and sentencing of the U.S. financial system brings an end to decades of disappointment born from dozens of episodes when authorities appeared to have cornered their target only to have the fugitive from justice slip away or escape through some legal technicality as happened with the repeal of the Glass-Steagall Act in 1999.

“I don’t think we ever gave up hope, but I would be lying to you if I said there weren’t days that we didn’t feel frustratingly outgunned and discouraged,” Mr. Geithner said.

Even with numerous high-ranking officials, including himself, having found their way inside the criminal enterprise, Mr. Geithner said it was enormously difficult to tie the misdeeds to the system itself.

“Whenever we talked about it, it always seemed to come back to us and not the system. It was maddening. You have to remember, this is a very sophisticated operation, with thousands upon thousands of structured investment vehicles,” he said. “But now that we have it in custody, I think the American people can rest assured that our financial problems are over and the American dream is alive and well again.”

In pointed words during the sentencing, U.S. District Judge Adam Smith reprimanded the U.S. system for “turning its virtues into the world’s liabilities and pleaded with it to return to him his retirement savings that he had watched evaporate back in 2008.

The judge didn’t receive a satisfactory answer to his own plea but he did seem to gain a measure of satisfaction from warning investment bank executives sitting in the courtroom audience against “any smart ideas of repackaging the financial system’s liabilities into a credit default swap.”

Immediately after the sentencing, the Justice Department released a statement saying it opposed allowing the U.S. system to stay out of prison while it appeals, saying it might flee to its native England or some other country. The U.S. financial system “would have access to tens of trillions of dollars by the mere touch of a keystroke,” the government said in a court filing.

At its sentencing hearing the financial system offered no apology for its actions and no further explanation for its lawbreaking except to say that it was being unfairly blamed for the actions of a few hundred thousand rogue traders.

The financial system will join a list of high-profile white-collar financial figures sent to prison, including former Enron executive Jeffrey Skilling, former WorldCom executive Bernard Ebbers and Ponzi scheme mastermind Bernard Madoff.

Looking on as the country’s financial system, frail but elegantly-attired in a gray pinstriped suit, was led from the courtroom in handcuffs, the recently convicted hedge fund billionaire Raj Rajaratnam said, “It is a sad conclusion to what once seemed to be a glittering story.”